JOLTS and Consumer Confidence will perhaps give the markets more stable direction

USD: Sept '24 is Up at 104.410.

Energies: Aug '24 Crude is Down at 75.28.

Financials: The Sept '24 30 Year T-Bond is Up 2 ticks and trading at 119.23

Indices: The Sept '24 S&P 500 emini ES contract is 40 ticks Higher and trading at 5513.00.

Gold: The Aug'24 Gold contract is trading Up at 2431.40  

Initial conclusion

This is not a correlated market.  The USD is Up and Crude is Down which is normal, and the 30 Year T-Bond is trading Up.  The Financials should always correlate with the US dollar such that if the dollar is Higher, then the bonds should follow and vice-versa. The S&P is Higher and Crude is trading Lower which is correlated. Gold is trading Higher which is not correlated with the US dollar trading Up.  I tend to believe that Gold has an inverse relationship with the US Dollar as when the US Dollar is down, Gold tends to rise in value and vice-versa. Think of it as a seesaw, when one is up the other should be down. I point this out to you to make you aware that when we don't have a correlated market, it means something is wrong. As traders you need to be aware of this and proceed with your eyes wide open.  Currently Asia is trading Mixed.   Europe is trading mainly Higher with the exception of the London exchange. 

Possible challenges to traders

• S&P/CS Composite-20 HPI y/y is out at 9 AM EST. This is Major.

• HPI m/m is out at 9 AM EST.  This is Major.

• CB Consumer Confidence is out at 10 AM EST.  This is Major.

• JOLTS Job Openings is out at 10 AM EST.  This is Major.

Traders, please note that we've changed the Bond instrument from the 10 year (ZN) to the 2 year (ZT).  They work exactly the same.  

We've elected to switch gears a bit and show correlation between the 10-year Treasury notes (ZN) and the S&P futures contract.  The YM contract is the Dow Jones Industrial Average, and the purpose is to show reverse correlation between the two instruments.  Remember it's likened to a seesaw, when up goes up the other should go down and vice versa.  

Yesterday the ZT migrated Lower at around 8 AM EST with no economic news to report.  If you look at the charts below the ZT gave a signal at around 8 AM and started its Downward slide.  Look at the charts below and you'll see a pattern for both assets. The Dow moved Higher at 8 AM and the ZT moved Lower at around the same time.  These charts represent the newest version of BarCharts, and I've changed the timeframe to a 15-minute chart to display better.  This represented a Short opportunity on the 2-year note, as a trader you could have netted about a dozen ticks per contract on this trade.   Each tick is worth $7.625.  Please note: the front month for ZT is Sept and the Dow is now Sept '24.  I've changed the format to filled Candlesticks (not hollow) such that it may be more apparent and visible.  

Charts courtesy of Barcharts 

 

ZT -Sept 2024 - 07/29/24

 

Dow - Sept 2024 - 07/29/24

Bias

Yesterday we gave the markets a Neutral or Mixed bias and they didn't disappoint.  The Dow closed 49 points Lower but the S&P and Nasdaq both traded Higher.  Today we aren't dealing with a correlated market and our bias is Neutral or Mixed.

Could this change? Of Course. Remember anything can happen in a volatile market. 

Commentary

Yesterday we gave the markets a Mixed or Neutral bias as we didn't see much in the way of market correlation Monday morning.  Additional there was no real economic news to speak of, which means the markets were left to their own devices.  This means the markets could go in any direction and often does.  As expected, the markets traded Mixed as the Dow closed Lower but the other indices traded Higher.  Today we have more in the way of economic news.  Home Price Index numbers, Jolts Job Openings and Consumer Confidence are all major and proven market movers so perhaps this will give the markets more stable direction.